RELX (LON:REL) Is Increasing Its Dividend To £0.17
RELX PLC (LON:REL) has announced that it will be increasing its periodic dividend on the 7th of September to £0.17, which will be 8.3% higher than last year's comparable payment amount of £0.157. This takes the annual payment to 2.1% of the current stock price, which is about average for the industry.
Check out our latest analysis for RELX
RELX's Earnings Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, RELX was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 26.9%. If the dividend continues on this path, the payout ratio could be 52% by next year, which we think can be pretty sustainable going forward.
RELX Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of £0.23 in 2013 to the most recent total annual payment of £0.546. This implies that the company grew its distributions at a yearly rate of about 9.0% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
RELX May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings has been rising at 2.4% per annum over the last five years, which admittedly is a bit slow. The company has been growing at a pretty soft 2.4% per annum, and is paying out quite a lot of its earnings to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.
We Really Like RELX's Dividend
Overall, a dividend increase is always good, and we think that RELX is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for RELX that investors need to be conscious of moving forward. Is RELX not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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